Paying for college is stressful and confusing enough. When housing and student loans are involved, it’s important to know how housing is handled ahead of time. All student loans will cover housing. But what money is available for off-campus housing varies by school.
Cost of College
Every college publishes annual cost-of-college figures so students (and parents) can plan ahead. The data is used to determine how much is needed for the upcoming year. These costs include tuition, room and board, books and supplies, fees, equipment and room materials. Travel costs are usually not included in the calculations but should be factored in when applying to out-of-area schools.
Room and board costs are usually based on the dorm. Since off-campus housing costs vary greatly, schools use the on-campus housing costs when calculating expenses whether the student lives on campus or not. However, some schools do publish typical off-campus living costs. This is particularly true for schools that do not have enough dorm space for all students. In addition, at some schools it is rare for upperclassmen to still be in the dorm.
Housing is considered when calculating the cost for each student to determine need based aid. It is also part of the totals used to determine what may be needed in the way of loans.
On- Vs. Off-Campus
How the money is applied for housing differs depending on where the student lives. Costs for on-campus living are usually on a student’s tuition bill. So schools readily apply loan funds at their disposal to bills for on-campus housing and meal plans. The student usually doesn’t have to do anything.
Any remaining money from financial aid and loans is paid to the student once the direct school bills (usually tuition, fees, travel, and health insurance) are paid. The money the student receives at that point can be used to pay for off-campus housing and food.
Ask the School
Estimated costs for students living off campus should be shared with the financial aid office. When there isn’t a dorm contract, the school has no way of knowing whether the student is living at home or rent free. Let the financial aid office know, so they adjust aid needed figures to include off -campus housing (and transportation) costs.
Most schools reserve the right to verify housing costs. Some schools even require copies of rental agreements or cancelled checks.
The method and timing schools use for reimbursing off campus housing costs differ greatly. Student renting apartments need to pay deposits and at least one month’s rent out of pocket before any financial aid funds are freed up. That’s because most schools hold onto funds for at least one month after school starts before dispersing any excess to students to cover out-of-pocket expenses like books or off-campus rent. At some schools, it can take even longer to receive aid funds from the financial aid office. In some college areas, landlords are used to working with students awaiting school monies. But, to be safe, be prepared to shoulder the cost for at least a couple of months.
Keep Loans Payable
Learning to be independent is one of the most important lessons many achieve in college. But when accruing loans to cover living costs as well as tuition, it’s important to try to keep costs as low as possible. Rent in some college areas can be very expensive, but choosing housing as inexpensive as possible or having numerous roommates keeps costs down. Being conservative on costs during school will pay off in the long run. Don’t forget the money loaned needs to be paid back after school.